A U.S. Coast Guard boat participates in a training exercise on the Potomac River in Washington, September 11, 2009.Reuters

In an incredibly stupid move that set off panic and a security scare across Washington, the Coast Guard admitted today that it was conducting an ill-timed training exercise in the Potomac River on the eighth anniversary of 9/11, moments before President Obama and his motorcade crossed a nearby bridge.

Coast Guard Chief Keith Moore said no shots had been fired as part of the exercise and there were no suspicious boats in the river.

CNN, who first reported the incident, said that chatter on police scanners revealed that the Coast Guard had fired 10 rounds of ammunition.

But Coast Guard spokesman John Edwards said references to shots fired were picked up in radio chatter. As part of its exercise this morning, the Coast Guard said it aired simulated instructions to participants to fire 10 rounds.

The Coast Guard conducts training on the river everyday — often featuring small vessels with machine guns attached to their fronts between the the 14th Street and Memorial Bridges — and had nothing to do with 9/11, said Edwards.

“This is routine training for us and we train everyday,” he said.

Making matters worse, a law enforcement official, speaking on condition of anonymity, told The Associated Press that federal agents scrambled to the river fearing another attack since the local FBI office had not been told ahead of time of the exercise.

The Department of Homeland Security was created in response to the 9/11 attacks. Ironically, the Coast Guard and Secret Service were placed within the department as part of a system aimed to promote sharing of information among other law enforcement agencies.

“It’s unlikely that an exercise like this would have been approved by an operational commander,” Capt. Raymond Brown, former chief of intelligence analysis for the Coast Guard, told the Fox News Channel.

“More likely, it would be a dumb decision made by someone at a much lower level.”

At the same time, Obama — observing his first Sept. 11 as president — was traveling to the Pentagon for a ceremony commemorating the attacks.

In a statement, the Coast Guard said it was “still gathering information of how this training event might have been misconstrued as an actual incident. We will conduct a thorough review of this incident.”

The White House later defended the Coast Guard’s decision to hold the training exercise today.

Obama spokesman Robert Gibbs said if law enforcement felt there was a need for the exercise it is “best not to second-guess” them.

But Gibbs blasted CNN for airing an inaccurate report that shots were fired during the exercise, saying “before we report things like this, checking would be good.”

More than an hour after the initial report, CNN anchor Kyra Phillips said on the air that the incident stemmed from someone saying, “Bang! Bang! Bang!” over a radio frequency monitored by the network’s police scanner.

“We did call the Coast Guard, and the Coast Guard said, ’We don’t know what you’re talking about,’” she said.

CNN went ahead with the story based on a reporter’s other sources, Phillips said.

“We’re still trying to hammer this out, but we did what we were supposed to do, according to our folks in Washington,” Phillips said.

A CNN spokesman did not immediately return a call seeking comment.

As a result of CNN’s report, Federal Aviation Administration spokeswoman Diane Spitaliere said departures at nearby Reagan National Airport were grounded at 10:08 a.m., minutes after the drill was conducted, as a precaution.

The airport reopened and flights resumed about 30 minutes later.

A group for military families expressed outrage that the training exercise was held near the Pentagon at the same time families of those who died on Sept. 11 had gathered for a memorial.

“September 11th is a day to remember the loss of 2,973 innocent victims in New York, Pennsylvania and the Pentagon; not a day to create an unnecessary panic near a terrorist’s target,” Military Families United said in a statement.

The drill is reminiscent of another bone-headed move earlier this year when the White House decided to fly Air Force One low over New York as part of a photo-op.

The sight of the famous plane trailed closely by a fighter jet on April 27 near the Statue of Liberty and Ground Zero caused people in lower Manhattan and New Jersey to run and scream, fearing a 9/11-type attack — infuriating President Obama.

After that incident, Obama said it was a mistake and promised it would not happen again. The director of the White House’s military office resigned after the incident.